The crypto market is highly volatile, which leads to regular pumps and dumps. In this environment, automated trading is the best way to book good profits. If you are interested in automated crypto trading, then this article is for you. It covers the main advantages and disadvantages of crypto trading automation.
Let’s jump into it.
What Is Crypto Trading Automation?
Crypto trading automation is a technique that allows you to enter and exit precise market positions without continuously monitoring your computer. Predesigned trading systems do most of the job for you with the help of scenarios. You just need to choose a scenario or design one according to your plans and apply it.
In other words, a crypto trading system executes orders at a crypto exchange you choose, depending on your trading scenario. Trades can be executed based on asset price, technical indicators, or the percentage of your portfolio’s worth. This significantly lowers your risks and gives you a competitive advantage over manual traders.
Pros and Cons of Crypto Trading Automation
Take a closer look at the major pros and cons of automated cryptocurrency trading.
Pros of Automated Trading
- Better Timing: Crypto trading scenarios are sophisticated algorithms that can complete trades considerably more quickly than humans. As a result, trades are executed with pinpoint accuracy on the trading algorithm’s exact value. Getting into or out of a trade a few seconds earlier can significantly impact the result of the trade.
Slippages (the difference between the planned price and the price at which the trade occurs) are common in crypto trading because of volatility. These system slippages are eliminated with algorithmic trading.
- No Emotions Involved: Investors are human beings who experience various emotions about a particular asset. Traders might easily panic, become overconfident, or have FOMO (fear of missing out) on a lucrative asset. Emotions influence your decision-making and can lead to mistakes in judgment and poor decisions, resulting in trades being closed at a loss, reaching a stop loss, or liquidating.
One of the key advantages of employing a crypto trading scenario is that it has no emotional attachment to the trade and enters or exits depending on market conditions rather than a gut sense.
- Opportunities for Backtesting: Backtesting is the process of putting various trading algorithms to the test using historical market data. This is done to assess the plan’s effectiveness. Traders can use past data to evaluate these specific sets of rules before risking money in actual trading. You may utilize historical market data to test whether a trading plan would work based on previous results instead of guessing and perhaps losing money.
An automated crypto trading system can perform this time-consuming task quickly and accurately.
- Simple Investment: For new investors, understanding blockchains and cryptocurrency may be a bit difficult. They struggle to comprehend complex charts, data analysis, price analysis, and the latest news. Crypto trading scenarios eliminate the need for users to stare at their displays the whole day. You just sign up, choose trade patterns, and let the algorithms handle the rest.
Cons of Automated Trading
- Over-Optimization: The main risk of employing automated trading systems is that traders may fall into the trap of over-optimizing their strategies to find the best ones. They can make constant adjustments to their plans to reach 100% profit.
When this happens, your strategy is said to be “over-optimized,” which means it’s too complicated for the system to implement in the actual world; it looks nice on paper but doesn’t perform as predicted on the live market.
- Still Require Monitoring: Automated trading systems are intended to be utilized while you are away from your computer. If something unexpected occurs (system quirkiness, connectivity troubles, power outages, or computer breakdowns), it can cause erroneous, missing, or duplicate orders, which in turn can result in a minor or huge loss.
- Security Issues: Using crypto trading systems is generally regarded as secure, particularly the DeFi model, which is hosted on the blockchain and executed through smart contracts. It is, however, still vulnerable to security breaches as a result of hacking. So, always read customer comments and reviews.
Let’s check out one such automated crypto trading system.
How to Automate Your Crypto Trades
Obolon9 is a safe and secure automated cryptocurrency trading system with pre-designed scenarios (plus configurable scenarios). This system offers the best of both worlds by combining the flexibility of manual trading with the attentiveness and accuracy of pre-designed scenarios.
Automated trading systems are designed to help you achieve better trade timing, non-emotional behavior, and backtesting. Sometimes, due to certain conditions, such systems are not able to provide guaranteed results. You have to decide on your own, by keeping both sides in mind, whether you should go for automated crypto trading or not. Obolon9 is a safe and secure system to automate your cryptocurrency trades.